%0 Report
        %A Portugal, Pedro
%A Reis, Hugo
%A Guimaraes, Paulo
%A Cardoso, Ana Rute
        %T Human Capital Spillovers and the External Returns to Education
        %D 2025
        %8 2025 Feb
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17690
        %U https://www.iza.org/publications/dp17690
        %X We employ a regression model with spillover effects to show that the impact of peer quality on wages is quite large. We estimate that a 10 percent increase in peer quality implies a 2.1 percent increase in an individual's wage. In addition, we estimate the external returns to education using a novel identification strategy, which is strictly based on the peer effect channel, netting out the role of homophily and labor market sorting. We show that a one-year increase in the co-workers' education leads to a 0.58 percent increase in wages. We also show that both effects fade smoothly over time.
        %K wage distribution
%K human capital spillovers
%K external returns to education
%K peer effects
%K linked employer-employee data
%K high-dimensional fixed effects
%K workplace
%K job and occupation